Why Bitcoin is falling: reasons for the decrease in its value.

If you choose the most popular global cryptocurrency, it is definitely Bitcoin. Even those who have never used crypto for earnings know about it. 

However, what you definitely need to know about Bitcoin is that it is a very unstable currency. Therefore, the question of why the Bitcoin exchange rate is falling may arise for a newcomer or even an experienced investor. It is important to know why Bitcoin may fall and other reasons for decline in order to know when it is better to invest funds. Overall, the exchange rate and price of Bitcoin are very important. After all, a fall can negatively affect the earnings of an investor. 

Why is Bitcoin falling? 

When discussing the topic of why Bitcoin is falling in price, it is necessary to return a bit to the history of the currency. Bitcoin became the first cryptocurrency that still does not lose momentum. It has been actively integrated for more than 10 years and does not lose its relevance. The price of Bitcoin can fluctuate significantly, making it a very volatile asset. During this Time, it has experienced both rapid rises and sharp falls, raising many questions about the factors influencing the decline in its rate. In 2024, a series of events continues to affect Bitcoin and other cryptocurrencies. 

When talking about the fall and rises of Bitcoin, this cryptocurrency does not differ much from Ether or other currencies. If we talk about the decline of the currency, it can happen for a number of reasons: 

1. The influence of global economic factors. Economic changes at the global level can significantly impact the Bitcoin exchange rate. Cryptocurrency markets are closely related to the overall economic situation in the world, and when major economies face problems, this affects digital assets as well. In this case, we must mention recession and crises. If there are problems in the global economy, then Bitcoin may also be affected. 

2. Inflation. The higher it is, the higher the interest rates. Traditional money, accordingly, becomes more popular, which cannot be said about Bitcoin. This principle applies to any cryptocurrency. 

3. Volatility in traditional markets, currency crises, and other financial upheavals can also cause a capital outflow from the cryptocurrency market.

Each of these reasons or their combination can affect the stability of Bitcoin.

How does Bitcoin depend on the government? 

One of the key factors affecting the Bitcoin exchange rate is government regulation. Initially, Bitcoin was created for decentralization. That is, complete autonomy from traditional money. However, a complete disengagement cannot be achieved. 

For many years, governments around the world have tried to establish control over the cryptocurrency market by introducing various laws and restrictions. In 2024, this influence continues to grow. Some countries even want to introduce Bitcoin as a cold currency. However, this requires more time and tools. 

As for regulation itself, it affects the price of Bitcoin. Usually in a negative way. Bans on the use of cryptocurrencies: Countries like China have already introduced strict restrictions on mining and trading cryptocurrencies. The introduction of new laws or strengthening existing bans can cause mass sell-offs, leading to a decline in the exchange rate.

It is also important to consider that some exchanges are subject to higher regulation. New rules in the USA and the EU aimed at combating money laundering and financing terrorism can lead to decreased activity on cryptocurrency exchanges, which also reduces the value of assets. This is not a direct, but a very significant influence on crypto. 

It is also worth mentioning taxes. Increasing taxes on cryptocurrency transactions or tightening control over tax payments can deter some investors and traders, which also contributes to the decline in the exchange rate.

Supply and Demand 

The cryptocurrency market, if we strip off all the attributes, is not much different from any other financial market. In this case, demand and supply are significant. If demand for Bitcoin falls while supply remains the same, this will inevitably lead to a decrease in its value. In 2024, there are a number of factors that are leading to a decrease in demand for cryptocurrency.

For example, a certain loss of interest in crypto. When the price of Bitcoin rises, it attracts new market participants. However, if prices start to decline, many investors may exit the market, locking in losses.

If major funds and corporations that invested in Bitcoin decide to exit, this can lead to a significant decrease in demand and, accordingly, a fall in the exchange rate.

The media space has a powerful influence on investor sentiment and the prices of cryptocurrencies. Negative news can cause panic in the market, leading to mass sell-offs and a decline in the value of Bitcoin.